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Old 31st January 2012, 01:12 PM   #1
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Default Why I am shutting down the TechDIY Store

New IRS requirements require a form 1099-K by PayPal or any other credit card vendor if you have over 200 transactions, or over $20,000 in gross receipts.

The cost to comply with preparing and filing a K-1 for the LLC, and the further complexity to my income tax reporting just makes running the store a losing proposition. In NJ you're taxed on "Gross Receipts" and just the amount of time required to file with NJ for sales tax (which is probably less than $20) is a killer.

Thanks IRS and you big government politicians. This was part of a rider to the "Housing Recovery Act" of 2008. Anyone wonder why American businesses are relocating?
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Old 31st January 2012, 01:15 PM   #2
AndrewT is online now AndrewT  Scotland
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One of our Eastern European Members bumped into some similar PayPal rule.
He could not avoid the paperwork just to run a Group Buy.
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Old 31st January 2012, 02:31 PM   #3
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Quote:
Originally Posted by jackinnj View Post
New IRS requirements require a form 1099-K by PayPal or any other credit card vendor if you have over 200 transactions, or over $20,000 in gross receipts.

The cost to comply with preparing and filing a K-1 for the LLC, and the further complexity to my income tax reporting just makes running the store a losing proposition. In NJ you're taxed on "Gross Receipts" and just the amount of time required to file with NJ for sales tax (which is probably less than $20) is a killer.

Thanks IRS and you big government politicians. This was part of a rider to the "Housing Recovery Act" of 2008. Anyone wonder why American businesses are relocating?
Not good, the guy from Ampslab is also a member here and I have purchased from both.
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Old 31st January 2012, 02:49 PM   #4
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I'm sorry to hear your dilemma.

What happened to personal enterprise ?

My Ex was from Ukraine. It would seem perfectly reasonable to buy two cows or two elephants for that matter and let them breed. NO. If you buy a cow you have to pay tax. It's impossible to generate a business.
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Old 31st January 2012, 03:05 PM   #5
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Quote:
Originally Posted by jackinnj View Post
New IRS requirements require a form 1099-K by PayPal or any other credit card vendor if you have over 200 transactions, or over $20,000 in gross receipts.

The cost to comply with preparing and filing a K-1 for the LLC, and the further complexity to my income tax reporting just makes running the store a losing proposition. In NJ you're taxed on "Gross Receipts" and just the amount of time required to file with NJ for sales tax (which is probably less than $20) is a killer.

Thanks IRS and you big government politicians. This was part of a rider to the "Housing Recovery Act" of 2008. Anyone wonder why American businesses are relocating?
When I had a top lawyer look at my business he explained why using a corporate form was not a good idea. Now I am not immune to paperwork headaches, but I get a lot less of them.

I do work around the country and often file more than one municipal and state tax forms.

Yes I have had folks "correct" local returns as they assume I must be a corporation and owe more taxes.

I do get audited every so often and it really is not the issue as often told. You just set up a desk for the auditor with an outlet for their computer and all of the records requested in a nice pile. They really know in a few minutes if you are not cheating and will actually review your records to be sure you followed the rules. Now as the rules are so complicated no one actually understands them, they will explain any errors including ones where you paid more tax than required!

So far on three audits two were accepted as filed and the third did contain an error that resulted in no additional tax but yielded savings for the next few years!

Now the real lesson learned is that small tax bodies are the most difficult to deal with. They do not have the resources to do a thorough job and often just want to play "Let's make a deal" to get some more money on the general theory that everyone cheats! That says a lot more to me about them!

Now I do my own taxes, but my accountant prepares the financial reports required by banks and insurance companies!

Now for the stock answer that a corporate form lowers your liability, that is what insurance is for. Now if you want to get into using the corporate form to shield criminal activity, that is actually an effective use!!!
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Old 31st January 2012, 03:09 PM   #6
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Sad news indeed.
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Old 1st February 2012, 03:18 AM   #7
BFNY is offline BFNY  United States
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Quote:
Originally Posted by jackinnj View Post
New IRS requirements require a form 1099-K by PayPal or any other credit card vendor if you have over 200 transactions, or over $20,000 in gross receipts.

The cost to comply with preparing and filing a K-1 for the LLC, and the further complexity to my income tax reporting just makes running the store a losing proposition. In NJ you're taxed on "Gross Receipts" and just the amount of time required to file with NJ for sales tax (which is probably less than $20) is a killer.

Thanks IRS and you big government politicians. This was part of a rider to the "Housing Recovery Act" of 2008. Anyone wonder why American businesses are relocating?
I do my own taxes, have for a long time. Why don't you cap the biz at 20K / 200 transactions? Close down for the year after that.

Filing these forms has actually gotten easier, as most take them electronic format now.

I also pack and ship audio orders and send them all over the world. It is a labor of love, take a lot of time, and provides very little income. I can't believe filing a few more forms is harder than filling out postal forms and standing in line to mail out small packages for international shipments, but that's just me.

Now, if you really want to get me riled up, talk about the AMT and how it negates NY property and income tax deductions on schedule A. That one really hurts. And been around for a long time. But for small biz, section 179 deduction really is a nice way to buy R&D "tools" and negate income.
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Old 1st February 2012, 03:57 AM   #8
SirByrd is offline SirByrd  United States
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Bummer. I would be willing to pay more for your kits and parts, if the selling price has a factor in shutting it down.
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Old 1st February 2012, 04:02 AM   #9
iko is offline iko  Canada
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Or just accept payment via moneygram or western union. Surely that's not too much of an effort. Plus you get some exercise walking to a moneygram location near you. And I'm not kidding.
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Old 1st February 2012, 04:49 AM   #10
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I have had only outrageously satisfactory transactions with you. I would send a money order.

I guess I need to watch my back, as well...
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